Collaboration and Affordable Housing 101
Updated: Feb 18
By Hannah Beavers
Before I started working at Freedom Communities, affordable housing wasn’t something I had thought much about – yes, I acknowledge my privilege that, fortunately I did not have to.
Talk about affordable housing is a buzz around the Queen City. Many have an opinion on the issue, but few seem to understand the facts. As a truth seeker – facts are not always easy to find – and some of the most insidious parts of the equation, you don’t see until you continue to peel back the onion.
Over the last couple of months, our team has done a lot of digging to understand both the human and the business side of the affordable housing challenge – and we probably learn something new every week. We’re not experts, but wanted to compile what we’ve learned to help others who might be interested.
Why? Knowledge is power. Once people begin to understand, we are better equipped to take action.
For starters … what is “unaffordable” housing?
If someone is paying more than 30% of their income on rent, this housing is unaffordable which the industry calls "housing stressed". According to the 2019 State of Housing report produced by UNC Charlotte’s Urban Institute, 44% (78,862) of renter households and 21% (39,248) owner-occupied households in Mecklenburg County spent more than 30% of their income on housing in 2017.
That’s nearly 30% of ALL households in Mecklenburg County. Hence the term "crisis".
Another thing the report uncovered, (recently highlighted by the Charlotte Business Journal), is that if a person worked 40 hours a week, his or her wages would have to equal at least $17.50 an hour in order to afford a one bedroom apartment renting at market rate. When minimum wage is $7.25 an hour, a person would have to work 95 hours a week to afford a one bedroom unit, and 105 hours a week to afford a two-bedroom unit renting at fair market value.
So what are we doing about it?
In 2018, Charlotte voters approved a $50M bond to increase the “Housing Trust Fund”, a publicly administered pool of money that primarily provides 1% financing for affordable housing deals. In the past, there had only been between $10 - $15M available - so this was a great start.
The Foundation for the Carolinas jumped in committing to match the public money raised – and exceeded their goal by raising $53M in private contributions from local banks, health care institutions and foundations. They call this “CHOIF”: Charlotte Housing Opportunity Investment Fund.
The Local Initiatives Support Corporation (LISC) was brought to Charlotte with a $2M joint investment from the James L. Knight Foundation and others, to administer the $53 in private “CHOIF” funds in tandem with the $50M of public funding through the Housing Trust Fund (HTF). The City of Charlotte developed the Housing Charlotte Framework outlining how these various entities would be working together and then set their budget largely reflecting the Housing Framework’s recommendations.
That’s great! What happened next?
Thus far, 8 projects have been approved funding 950 units (708 new and 242 acquired and rehabbed). The Housing Framework and city budget suggested an equal split between new construction and preservation and a smaller amount for anti-displacement. Thus far, nearly 90% of the approved funds have been invested in new construction and the remainder has gone to acquiring and rehabilitating units currently renting below market.
Known as Naturally Occurring Affordable Housing, or "NOAHs", these are the units most vulnerable to being torn down or redeveloped, displacing or outpricing residents who previously called them home. Preserving NOAH properties is the most efficient and cost effective way to stabilize rents and to protect families from displacement due to gentrification.
In West Charlotte, where we work, these NOAHs are disappearing quickly, taking the families and community who used to live there with them. These units are being snatched up by investors who can increase rents by over 40% in some instances, by simply slapping on a coat of paint and doing minor renovations. Those affected, mostly low-income communities of color, know the story well. The stress this puts on families negatively impacts mental health and is directly linked to poor education outcomes.
The bottom line ...
While new units are desperately needed we can’t build our way out of this crisis. Because, as new units are being built, many more are being torn down. Those affected are looking for evidence that our rally cry around affordable housing will be more than just that.